526 U.S.

574
119 S.Ct. 1563
143 L.Ed.2d 760
145 F.3d 211, reversed and remanded.

SUPREME COURT OF THE UNITED STATES

No. 98 470

RUHRGAS AG, PETITIONER

v.
MARATHON OIL COMPANY et al.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS
FOR THE FIFTH CIRCUIT
[May 17, 1999]
Justice Ginsburg delivered the opinion of the Court.

1
This
case concerns the authority of the federal courts to adjudicate controversies.
Jurisdiction to resolve cases on the merits requires both authority over the category
of claim in suit (subject-matter jurisdiction) and authority over the parties (personal
jurisdiction), so that the court's decision will bind them. In Steel Co. v. Citizens for
Better Environment, 523 U.S. 83 (1998), this Court adhered to the rule that a federal
court may not hypothesize subject-matter jurisdiction for the purpose of deciding the
merits. Steel Co. rejected a doctrine, once approved by several Courts of Appeals,
that allowed federal tribunals to pretermit jurisdictional objections "where (1) the
merits question is more readily resolved, and (2) the prevailing party on the merits
would be the same as the prevailing party were jurisdiction denied." Id., at 93.
Recalling "a long and venerable line of our cases," id., at 94, Steel Co. reiterated:
"The requirement that jurisdiction be established as a threshold matter is'inflexible
and without exception,' " id., at 94 95 (quoting Mansfield, C. & L. M. R. Co. v.
Swan, 111 U.S. 379, 382 (1884)); for "[j]urisdiction is power to declare the law,"
and " '[w]ithout jurisdiction the court cannot proceed at all in any cause,' " 523 U.S.,
at 94 (quoting Ex parte McCardle, 7 Wall. 506, 514 (1869)). The Court, in Steel Co.,
acknowledged that "the absolute purity" of the jurisdiction-first rule had been diluted
in a few extraordinary cases, 523 U.S., at 101, and Justice O'Connor, joined by
Justice Kennedy, joined the majority on the understanding that the Court's opinion

did not catalog "an exhaustive list of circumstances" in which exceptions to the solid
rule were appropriate, id., at 110.
2
Steel
Co. is the backdrop for the issue now before us: If, as Steel Co. held,
jurisdiction generally must precede merits in dispositional order, must subject-matter
jurisdiction precede personal jurisdiction on the decisional line? Or, do federal
district courts have discretion to avoid a difficult question of subject-matter
jurisdiction when the absence of personal jurisdiction is the surer ground? The
particular civil action we confront was commenced in state court and removed to
federal court. The specific question on which we granted certiorari asks "[w]hether a
federal district court is absolutely barred in all circumstances from dismissing a
removed case for lack of personal jurisdiction without first deciding its subjectmatter jurisdiction." Pet. for Cert. i.
3 hold that in cases removed from state court to federal court, as in cases
We
originating in federal court, there is no unyielding jurisdictional hierarchy.
Customarily, a federal court first resolves doubts about its jurisdiction over the
subject matter, but there are circumstances in which a district court appropriately
accords priority to a personal jurisdiction inquiry. The proceeding before us is such a
case.
*4 The underlying controversy stems from a venture to produce gas in the Heimdal
Field of the Norwegian North Sea. In 1976, respondents Marathon Oil Company and
Marathon International Oil Company acquired Marathon Petroleum Company
(Norway) (MPCN) and respondent Marathon Petroleum Norge (Norge). See App.
26.1 Before the acquisition, Norge held a license to produce gas in the Heimdal
Field; following the transaction, Norge assigned the license to MPCN. See Record,
Exhs. 61 and 62 to Document 64. In 1981, MPCN contracted to sell 70% of its share
of the Heimdal gas production to a group of European buyers, including petitioner
Ruhrgas AG. See Record, Exh. 1 to Document 63, pp. 90, 280. The parties'
agreement was incorporated into the Heimdal Gas Sales Agreement (Heimdal
Agreement), which is "governed by and construed in accordance with Norwegian
Law," Record, Exh. B, Tab 1 to Pet. for Removal, Heimdal Agreement, p. 102;
disputes thereunder are to be "exclusively and finally settled by arbitration in
Stockholm, Sweden, in accordance with" International Chamber of Commerce rules,
id., at 100.
II
5
Marathon
Oil Company, Marathon International Oil Company, and Norge
(collectively, Marathon) filed this lawsuit against Ruhrgas in Texas state court on
July 6, 1995, asserting state-law claims of fraud, tortious interference with
prospective business relations, participation in breach of fiduciary duty, and civil

conspiracy. See App. 33 40. Marathon Oil Company and Marathon International Oil
Company alleged that Ruhrgas and the other European buyers induced them with
false promises of "premium prices" and guaranteed pipeline tariffs to invest over
$300 million in MPCN for the development of the Heimdal Field and the erection of
a pipeline to Ruhrgas' plant in Germany. See id., at 26 28; Brief for Respondents 1 2.
Norge alleged that Ruhrgas' effective monopolization of the Heimdal gas diminished
the value of the license Norge had assigned to MPCN. See App. 31, 33, 357; Brief
for Respondents 2. Marathon asserted that Ruhrgas had furthered its plans at three
meetings in Houston, Texas, and through a stream of correspondence directed to
Marathon in Texas. See App. 229, 233.
6
Ruhrgas
removed the case to the District Court for the Southern District of Texas.
See 145 F.3d 211, 214 (CA5 1998). In its notice of removal, Ruhrgas asserted three
bases for federal jurisdiction: diversity of citizenship, see 28 U.S.C. 1332 (1994 ed.
and Supp. III), on the theory that Norge, the only nondiverse plaintiff, had been
fraudulently joined;2 federal question, see 1331, because Marathon's claims
"raise[d] substantial questions of foreign and international relations, which are
incorporated into and form part of the federal common law," App. 274; and 9 U.S.C.
205 which authorizes removal of cases "relat[ing] to" international arbitration
agreements.3 See 145 F.3d, at 214 215; 115 F.3d 315, 319 321 (CA5), vacated and
rehearing en banc granted, 129 F.3d 746 (1997). Ruhrgas moved to dismiss the
complaint for lack of personal jurisdiction. Marathon moved to remand the case to
the state court for lack of federal subject-matter jurisdiction. See 145 F.3d, at 215.
7
After
permitting jurisdictional discovery, the District Court dismissed the case for
lack of personal jurisdiction. See App. 455. In so ruling, the District Court relied on
Fifth Circuit precedent allowing district courts to adjudicate personal jurisdiction
without first establishing subject-matter jurisdiction. See id., at 445. Texas' long-arm
statute, see Tex. Civ. Prac. & Rem. Code Ann. 17.042 (1997), authorizes personal
jurisdiction to the extent allowed by the Due Process Clause of the Federal
Constitution. See App. 446; Kawasaki Steel Corp. v. Middleton, 699 S. W. 2d 199,
200 (Tex. 1985). The District Court addressed the constitutional question and
concluded that Ruhrgas' contacts with Texas were insufficient to support personal
jurisdiction. See App. 445 454. Finding "no evidence that Ruhrgas engaged in any
tortious conduct in Texas," id., at 450, the court determined that Marathon's
complaint did not present circumstances adequately affiliating Ruhrgas with Texas,
see id., at 448.4
8 panel of the Court of Appeals for the Fifth Circuit concluded that "respec[t]" for
A
"the proper balance of federalism" impelled it to turn first to "the formidable subject
matter jurisdiction issue presented." 115 F.3d, at 318. After examining and rejecting
each of Ruhrgas' asserted bases of federal jurisdiction, see id., at 319 321,5 the Court
of Appeals vacated the judgment of the District Court and ordered the case

remanded to the state court, see id., at 321. This Court denied Ruhrgas' petition for a
writ of certiorari, which was limited to the question whether subject-matter
jurisdiction existed under 9 U.S.C. 205. See 522 U.S. 967 (1997).
9 Fifth Circuit, on its own motion, granted rehearing en banc, thereby vacating the
The
panel decision. See 129 F.3d 746 (1997). In a 9-to-7 decision, the en banc court held
that, in removed cases, district courts must decide issues of subject-matter
jurisdiction first, reaching issues of personal jurisdiction "only if subject-matter
jurisdiction is found to exist." 145 F.3d, at 214. Noting Steel Co.'s instruction that
subject-matter jurisdiction must be " 'established as a threshold matter,' " 145 F.3d,
at 217 (quoting 523 U.S., at 94), the Court of Appeals derived from that decision
"counsel against" recognition of judicial discretion to proceed directly to personal
jurisdiction. 145 F.3d, at 218. The court limited its holding to removed cases; it
perceived in those cases the most grave threat that federal courts would "usur[p]
state courts' residual jurisdiction." Id., at 219.6
10
Writing
for the seven dissenters, Judge Higginbotham agreed that subject-matter
jurisdiction ordinarily should be considered first. See id., at 231. If the challenge to
personal jurisdiction involves no complex state-law questions, however, and is more
readily resolved than the challenge to subject-matter jurisdiction, the District Court,
in the dissenters' view, should take the easier route. See ibid. Judge Higginbotham
regarded the District Court's decision dismissing Marathon's case as illustrative and
appropriate: While Ruhrgas' argument under 9 U.S.C. 205 presented a difficult
issue of first impression, its personal jurisdiction challenge raised "[n]o substantial
questions of purely state law," and "could be resolved relatively easily in [Ruhrgas']
favor." 145 F.3d, at 232 233.
11 granted certiorari, 525 U.S. __ (1998), to resolve a conflict between the
We
Circuits7 and now reverse.
III
12 Co. held that Article III generally requires a federal court to satisfy itself of its
Steel
jurisdiction over the subject matter before it considers the merits of a case. "For a
court to pronounce upon [the merits] when it has no jurisdiction to do so," Steel Co.
declared, "is for a court to act ultra vires." 523 U.S., at 101 102. The Fifth Circuit
incorrectly read Steel Co. to teach that subject-matter jurisdiction must be found to
exist, not only before a federal court reaches the merits, but also before personal
jurisdiction is addressed. See 145 F.3d, at 218.
*13The Court of Appeals accorded priority to the requirement of subject-matter
jurisdiction because it is nonwaiv-able and delimits federal-court power, while
restrictions on a court's jurisdiction over the person are waivable and protect
individual rights. See id., at 217 218. The character of the two jurisdictional

bedrocks unquestionably differs. Subject-matter limitations on federal jurisdiction

serve institutional interests. They keep the federal courts within the bounds the
Constitution and Congress have prescribed. Accordingly, subject-matter delineations
must be policed by the courts on their own initiative even at the highest level. See
Steel Co., 523 U.S., at 94 95; Fed. Rule Civ. Proc. 12(h)(3) ("Whenever it appears
that the court lacks jurisdiction of the subject matter, the court shall dismiss the
action."); 28 U.S.C. 1447(c) (1994 ed., Supp. III) ("If at any time before final
judgment [in a removed case] it appears that the district court lacks subject matter
jurisdiction, the case shall be remanded.").
14
Personal
jurisdiction, on the other hand, "represents a restriction on judicial power as
a matter of individual liberty." Insurance Corp. of Ireland v. Compagnie des
Bauxites de Guinee, 456 U.S. 694, 702 (1982). Therefore, a party may insist that the
limitation be observed, or he may forgo that right, effectively consenting to the
court's exercise of adjudicatory authority. See Fed. Rule Civ. Proc. 12(h)(1) (defense
of lack of jurisdiction over the person waivable); Insurance Corp. of Ireland, 456
U.S., at 703 (same).
15
These
distinctions do not mean that subject-matter jurisdiction is ever and always
the more "fundamental." Personal jurisdiction, too, is "an essential element of the
jurisdiction of a district court," without which the court is "powerless to proceed to
an adjudication." Employers Reinsurance Corp. v. Bryant, 299 U.S. 374, 382 (1937).
In this case, indeed, the impediment to subject-matter jurisdiction on which
Marathon relies lack of complete diversity rests on statutory interpretation, not
constitutional command. Marathon joined an alien plaintiff (Norge) as well as an
alien defendant (Ruhrgas). If the joinder of Norge is legitimate, the complete
diversity required by 28 U.S.C. 1332 (1994 ed. and Supp. III), but not by Article
III, see State Farm Fire & Casualty Co. v. Tashire, 386 U.S. 523, 530 531 (1967), is
absent. In contrast, Ruhrgas relies on the constitutional safeguard of due process to
stop the court from proceeding to the merits of the case. See Insurance Corp. of
Ireland, 456 U.S., at 702 ("The requirement that a court have personal jurisdiction
flows from the Due Process Clause.").
16
While
Steel Co. reasoned that subject-matter jurisdiction necessarily precedes a
ruling on the merits, the same principle does not dictate a sequencing of
jurisdictional issues. "[A] court that dismisses on non-merits grounds such as
personal jurisdiction, before finding subject-matter jurisdiction, makes no
assumption of law-declaring power that violates the separation of powers principles
underlying Mansfield and Steel Company." In re Papandreou, 139 F.3d 247, 255
(CADC 1998). It is hardly novel for a federal court to choose among threshold
grounds for denying audience to a case on the merits. Thus, as the Court observed in
Steel Co., district courts do not overstep Article III limits when they decline
jurisdiction of state-law claims on discretionary grounds without determining

whether those claims fall within their pendent jurisdiction, see Moor v. County of
Alameda, 411 U.S. 693, 715 716 (1973), or abstain under Younger v. Harris, 401
U.S. 37 (1971), without deciding whether the parties present a case or controversy,
see Ellis v. Dyson, 421 U.S. 426, 433 434 (1975). See Steel Co., 523 U.S., at 100
101, n. 3; cf. Arizonans for Official English v. Arizona, 520 U.S. 43, 66 67 (1997)
(pretermitting challenge to appellants' standing and dismissing on mootness
grounds).
B
17
Maintaining
that subject-matter jurisdiction must be decided first even when the
litigation originates in federal court, see Tr. of Oral Arg. 21; Brief for Respondents
13, Marathon sees removal as the more offensive case, on the ground that the
dignity of state courts is immediately at stake. If a federal court dismisses a removed
case for want of personal jurisdiction, that determination may preclude the parties
from relitigating the very same personal jurisdiction issue in state court. See Baldwin
v. Iowa State Traveling Men's Assn., 283 U.S. 522, 524 527 (1931) (personal
jurisdiction ruling has issue-preclusive effect).
18 preclusion in subsequent state-court litigation, however, may also attend a
Issue
federal court's subject-matter determination. Ruhrgas hypothesizes, for example, a
defendant who removes on diversity grounds a state-court suit seeking $50,000 in
compensatory and $1 million in punitive damages for breach of contract. See Tr. of
Oral Arg. 10 11. If the district court determines that state law does not allow punitive
damages for breach of contract and therefore remands the removed action for failure
to satisfy the amount in controversy, see 28 U.S.C. 1332(a) (1994 ed., Supp. III)
($75,000), the federal court's conclusion will travel back with the case. Assuming a
fair airing of the issue in federal court, that court's ruling on permissible state-law
damages may bind the parties in state court, although it will set no precedent
otherwise governing state-court adjudications. See Chicot County Drainage Dist. v.
Baxter State Bank, 308 U.S. 371, 376 (1940) ("[Federal courts'] determinations of
[whether they have jurisdiction to entertain a case] may not be assailed
collaterally."); Restatement (Second) of Judgments 12, p. 115 (1980) ("When a
court has rendered a judgment in a contested action, the judgment [ordinarily]
precludes the parties from litigating the question of the court's subject matter
jurisdiction in subsequent litigation."). Similarly, as Judge Higginbotham observed,
our "dualistic system of federal and state courts" allows federal courts to make issuepreclusive rulings about state law in the exercise of supplemental jurisdiction under
28 U.S.C. 1367. 145 F.3d, at 231, and n. 7.
19 essentially, federal and state courts are complementary systems for
Most
administering justice in our Nation. Cooperation and comity, not competition and
conflict, are essential to the federal design. A State's dignitary interest bears

consideration when a district court exercises discretion in a case of this order. If

personal jurisdiction raises "difficult questions of [state] law," and subject-matter
jurisdiction is resolved "as eas[ily]" as personal jurisdiction, a district court will
ordinarily conclude that "federalism concerns tip the scales in favor of initially
ruling on the motion to remand." Allen v. Ferguson, 791 F.2d 611, 616 (CA7 1986).
In other cases, however, the district court may find that concerns of judicial
economy and restraint are overriding. See, e.g., Asociacion Nacional de Pescadores
v. Dow Quimica, 988 F.2d 559, 566 567 (CA5 1993) (if removal is nonfrivolous and
personal jurisdiction turns on federal constitutional issues, "federal intrusion into
state courts' authority is minimized"). The federal design allows leeway for sensitive
judgments of this sort. " 'Our Federalism' "
20 not mean blind deference to 'States' Rights' any more than it means
"does
centralization of control over every important issue in our National Government and
its courts. The Framers rejected both these courses. What the concept does represent
is a system in which there is sensitivity to the legitimate interests of both State and
National Governments." Younger, 401 U.S., at 44.
21 Fifth Circuit and Marathon posit that state-court defendants will abuse the
The
federal system with opportunistic removals. A discretionary rule, they suggest, will
encourage manufactured, convoluted federal subject-matter theories designed to
wrench cases from state court. See 145 F.3d, at 219; Brief for Respondents 28 29.
This specter of unwarranted removal, we have recently observed, "rests on an
assumption we do not indulge that district courts generally will not comprehend, or
will balk at applying, the rules on removal Congress has prescribed . The welladvised defendant will foresee the likely outcome of an unwarranted removal a swift
and nonreviewable remand order, see 28 U.S.C. 1447(c), (d), attended by the
displeasure of a district court whose authority has been improperly invoked."
Caterpillar Inc. v. Lewis, 519 U.S. 61, 77 78 (1996).
C
22 accord with Judge Higginbotham, we recognize that in most instances subjectIn
matter jurisdiction will involve no arduous inquiry. See 145 F.3d, at 229
("engag[ing]" subject-matter jurisdiction "at the outset of a case [is] often the most
efficient way of going"). In such cases, both expedition and sensitivity to state
courts' coequal stature should impel the federal court to dispose of that issue first.
See Cantor Fitzgerald, L. P. v. Peaslee, 88 F.3d 152, 155 (CA2 1996) (a court
disposing of a case on personal jurisdiction grounds "should be convinced that the
challenge to the court's subject-matter jurisdiction is not easily resolved"). Where, as
here, however, a district court has before it a straightforward personal jurisdiction
issue presenting no complex question of state law, and the alleged defect in subjectmatter jurisdiction raises a difficult and novel question, the court does not abuse its

discretion by turning directly to personal jurisdiction.8

***
23
24 the reasons stated, the judgment of the Court of Appeals is reversed, and the
For
case is remanded for proceedings consistent with this opinion.
It is so ordered.
25
Notes
26Ruhrgas is a German corporation; Norge is a Norwegian corporation. See App.
1.
21, 22. Marathon Oil Company, an Ohio corporation, and Marathon International Oil
Company, a Delaware corporation, moved their principal places of business from
Ohio to Texas while the venture underlying this case was in formation. See id., at
21, 239, and n. 11.
27A suit between "citizens of a State and citizens or subjects of a foreign state" lies
2.
within federal diversity jurisdiction. 28 U.S.C. 1332(a)(2). Section 1332 has been
interpreted to require "complete diversity." See Strawbridge v. Curtiss, 3 Cranch 267
(1806); R. Fallon, D. Meltzer, & D. Shapiro, Hart and Wechsler's The Federal
Courts and the Federal System 1528 1531 (4th ed. 1996). The foreign citizenship of
defendant Ruhrgas, a German corporation, and plaintiff Norge, a Norwegian
corporation, rendered diversity incomplete.
28Title 9 U.S.C. 205 allows removal "[w]here the subject matter of an action or
3.
proceeding pending in a State court relates to an arbitration agreement or award
falling under the Convention [on the Recognition and Enforcement of Foreign
Arbitral Awards of June 10, 1958]."
29Respecting the three meetings Ruhrgas attended in Houston, Texas, see supra, at
4.
4, the District Court concluded that Marathon had not shown that Ruhrgas pursued
the alleged pattern of fraud and misrepresentation during the Houston meetings. See
App. 449. The court further found that Ruhrgas attended those meetings "due to the
[Heimdal Agreement] with MPCN." Id., at 450. As the Heimdal Agreement provides
for arbitration in Sweden, the court reasoned, "Ruhrgas could not have expected to
be haled into Texas courts based on these meetings." Ibid. The court also determined
that Ruhrgas did not have "systematic and continuous contacts with Texas" of the
kind that would "subject it to general jurisdiction in Texas." Id., at 453 (citing
Helicopteros Nacionales de Colombia, S. A. v. Hall, 466 U.S. 408 (1984)).
30The Court of Appeals concluded that whether Norge had a legal interest in the
5.
Heimdal license notwithstanding its assignment to MPCN likely turned on difficult
questions of Norwegian law; Ruhrgas therefore could not show, at the outset, that

Norge had been fraudulently joined as a plaintiff to defeat diversity. See 115 F.3d
315, 319 320 (CA5), vacated and rehearing en banc granted, 129 F.3d 746 (1997).
The appeals court also determined that Marathon's claims did not "strike at the
sovereignty of a foreign nation," so as to raise a federal question on that account. 115
F.3d, at 320. Finally, the court concluded that Marathon asserted claims independent
of the Heimdal Agreement and that the case therefore did not "relat[e] to" an
international arbitration agreement under 9 U.S.C. 205. See 115 F.3d, at 320 321.
31The Fifth Circuit remanded the case to the District Court for it to consider the
6.
"nove[l]" subject-matter jurisdiction issues presented. 145 F.3d 211, 225 (CA5
1998). The appeals court "express[ed] no opinion" on the vacated panel decision
which had held that the District Court lacked subject-matter jurisdiction. Id., at 225,
n. 23.
32The Court of Appeals for the Second Circuit has concluded that district courts
7.
have discretion to dismiss a removed case for want of personal jurisdiction without
reaching the issue of subject-matter jurisdiction. See Cantor Fitzgerald, L. P. v.
Peaslee, 88 F.3d 152, 155 (1996).
33Ruhrgas suggests that it would be appropriate simply to affirm the District Court's
8.
holding that it lacked personal jurisdiction over Ruhrgas. See Brief for Petitioner 38
39, and n. 20. That issue is not within the question presented and is properly
considered by the Fifth Circuit on remand.